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  • Chapter 8 (Application - The Costs of Taxation)

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    Julz Julia
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    The document discusses the cost of taxation, specifically the concept of deadweight loss. It defines deadweight loss as the fall in total surplus that results from a market distortion. It then explains that the determinants of deadweight loss are the elasticities of supply and demand, with greater elasticities leading to greater loss, and that as the size of a tax increases, the deadweight loss also increases.

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    The document discusses the cost of taxation, specifically the concept of deadweight loss. It defines deadweight loss as the fall in total surplus that results from a market distortion. It then explains that the determinants of deadweight loss are the elasticities of supply and demand, with greater elasticities leading to greater loss, and that as the size of a tax increases, the deadweight loss also increases.

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    © All Rights Reserved
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    18 views12 pages

    Chapter 8 (Application - The Costs of Taxation)

    Uploaded by

    Julz Julia
    The document discusses the cost of taxation, specifically the concept of deadweight loss. It defines deadweight loss as the fall in total surplus that results from a market distortion. It then explains that the determinants of deadweight loss are the elasticities of supply and demand, with greater elasticities leading to greater loss, and that as the size of a tax increases, the deadweight loss also increases.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
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    Chapter 8

    Application:
    The Cost of Taxation
    RMBPanti, ADMU
    A. The Deadweight Loss of Taxation
    Effect of Tax
    Tax Revenue
    How Tax Affects Welfare
    Definition

    Deadweight Loss

    The fall in total surplus that results from a market distorion.


    B. Determinants of Deadweight Loss
    Elasticities and Deadweight Losses
    Elasticities and Deadweight Losses
    Elasticities and Deadweight Losses

    The greater the elasticity of supply and demand, the


    greater the deadweight loss of a tax
    Size of Tax and
    Deadweight Losses
    Size of Tax and
    Deadweight Losses

    As the size of the tax increases, the deadweight loss also


    increases.

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